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Sunday, May 28, 2006

Why The Poor Should Pay More Taxes, Part I

...okay, not really. But this post by DovBear got me a bit riled up, so I felt compelled to respond. Please read the whole thing, and the next post, which is a bit of a rant against the economic policies many would prefer without having thought through the issues fully. They are comments I made on the thread by DovBear.

Note
: You will not understand this post without first reading DovBear's.

The poor should pay more taxes, because the poor get more from the government.

Consider defense, for example, which makes up 20% of the budget. Defending the country benefits everyone; but it benefits the poor more, because they have more to gain. While the rich can afford to some extent to protect themselves, the poor cannot.

Social security: A program which soaks the working class to their long-term detriment, giving them money back at a lower rate than even the safest treasury bills. Those below a certain income level don't have to contribute much, if anything, to Social Security.

Investments in the nation's infrastructure-- transportation, education, research & development, energy, police subsidies, the courts, etc.-- again are more used by those with less. Public transportation is key to those who need it to get to their jobs - jobs which sometimes barely keep them alive. Police keep poor neighborhoods from breaking into all-out war, where the strong would overwhelm the weak. Courts keep criminals off the streets: and the streets criminals usually walk on are those of the poor.

As for public education, the beneficiaries are the lower and middle class. The very well off ship their offspring off to private schools; and while it is their companies that benefit from a well-educated public, those who are educated have a much greater gain: the ability to find a job and support themselves. (If you don't think that's a benefit, go find a good job, or even a min wage one, without an elementary and high school education.)

Beyond all this, the federal budget is bottom-heavy with welfare. Counting tax breaks and expenditures, there is $116 billion spent on DIRECT programs for the poor, seperate from all the indirect gains they get.

Meanwhile, the $400 billion that corporations save in tax breaks and receive in grants allows them to keep that many more people with jobs while simultaneously helping them constantly improve our products and security - which also reduce costs of everyone in the country, including those of lower incomes.

Then, of course, there's social spending: Giving many people enough that it's worth it for them not to work, or to only have one parent work, because increasing their wages would decrease their benefits versus the work being put in. Rather than supporting those who need it, social spending is wasted on those who do not, resulting in a negative overall impact from that spending.

And don't waste your time trying to respond to specific points. I'm not even claiming to agree with everything I said: My point is simply that there are arguments to be made both ways, and that you are undervaluing the *direct* gains poor people receive from the government.

[continue with Part II]

5 comments:

  1. Can I note that the national defense is the constitutional responsibility of the Feds..and welfare isnt?

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  2. Ezzie,

    Fascinating. I wouldn't have looked at the world this way, but I think you have a few legitimate points in there. I'll post a separate comment with a few rebuttals to your claims, but more importantly...

    The Flat Tax.

    I am fascinated by this idea, but need to continue to study it to better understand its potential effects. Some unanswered questions...

    Would not everyone be considered "more equal" under the law if we all simply paid 10% of our income in taxes?

    Would it not simplify a bloated tax code, freeing up highly educated lawyers and accountants to do more interesting and possibly more socially rewarding work?

    Would it not lighten the workload of the 108,000 person IRS?

    Could you not do the exact same thing for corporate tax? Every company pays 10% of their profits to the government. No loopholes. Less fraud.

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  3. The biggest problem as I see it with your theory, here, Ezzie is this: the marginal utility of every dollar is far less for the poor than for the rich.

    Therefore, a progressive tax system aims to even out that disparity.

    ReplyDelete
  4. Although you said don't do this, I'm going to do it anyway because I believe in tightening up interesting arguments... :)

    Defense

    True, the rich can better defend themselves. They also have more to lose.

    More importantly, those who actually make up the nation's armed forces are dominantly poor and working-class. Does that count for anything?

    Social Security

    That's the idea behind Social Security, and a social security safety net in general (such as the insurance industry). Everyone pools together a little money in case they need it. If they don't, they simply lose their share and it goes to those who need it.

    Isn't that what a government and what a community is all about... helping one another?

    Infrastructure

    I think you're mostly right about this one, but the courts wasn't a strong example. It seems to me that the rich have a huge advantage in the court system as they can hire better lawyers.

    Education

    The more of a low-income area you live in, the worse of an education you receive. There is no doubting that. I don't think the poor get much added value from the school system, but the middle class absolutely does, and you're right that they get more for their money than the upper class.

    Welfare

    If I had been you making this argument, I would have focused more on this. It could be your strongest point. Address potential weaknesses... How does $116 billion compare to the rest of the budget? It's a drop in the bucket, isn't it? (playing devil's inquisitor)

    Business regulation

    I believe in fast-tracking great businesses and business ideas. Right now, the government ought to be heavily subsidizing R&D in energy and medicine.

    Voodoo economics is a sham and the country would be better off if less people believed in it.

    Scoial spending

    Was this the same thing as welfare? Please clarify.

    ReplyDelete